Two US-based law firms Izard Nobel and Vianale & Vianale have filed class action lawsuits against Satyam Computer Services on behalf of shareholders who have American Depository Receipts (ADRs) of the company.
A 'class action' is a civil lawsuit, where a large group of people collectively bring a claim to court. The lawsuits are among the first legal actions taken against the management of Satyam, whose founder and Chairman B Ramalinga Raju said, "I am, now, prepared to subject myself to the laws of the land and face consequences thereof," while admitting to falsifying the company's balance sheet and announcing his resignation on January 7.
Satyam is also listed on the New York Stock Exchange, which yesterday said, "NYSE Regulation is currently evaluating the news relating to Satyam and will closely monitor further developments. The security will remain halted until further notice."
Nobel, which has a significant experience in representing investors in prosecuting claims of securities fraud, said the lawsuit seeking class action status has been filed in the United States District Court for the Southern District of New York on behalf of those who purchased the ADRs between January 6, 2004 and January 6, 2009, inclusive of the class period. The complaint charges that Satyam and its certain executives violated federal securities laws by issuing materially false and misleading statements. Vianale & Vianale, too, made a similar announcement for the same period. The action is pending in Manhattan federal court.
The complaint alleges that the company and its top executives violated Section 10(b) and 20(a) of the Securities Exchange Act of 1934, by issuing false and misleading financial statements.